Steve Wynn: tangled up in lawsuits

March 2, 2012 11:01 am

In fighting back against his former board member, Steve Wynn may win the battle but lose the war. That’s the gist of several pieces in The Wall Street Journal.

The dueling lawsuits between billionaire casino moguls Steve Wynn and former board member Kazuo Okada promises to be a big, costly distraction that will hamper future growth and dirty up both high-powered execs, Wall Street Journal columnist John Bussey writes. Meanwhile, another WSJ piece takes a look at the university in Macau that is at the center of the lawsuit Okada filed against Wynn.

Wynn’s lawsuit alleges Okada gave gifts to Asian regulators overseeing his company, Universal Entertainment, and told several Wynn directors there was nothing wrong with that practice. Bussey turns that around and wonders what that says about the governance at Wynn’s casino empire.

“The litigation won’t just examine what Mr. Okada did or didn’t do. It will scrutinize Wynn Resorts, too. For example: If Mr. Okada so egregiously violated compliance rules for years—as Wynn Resorts contends and Mr. Okada denies—why didn’t the company discover it sooner?” Bussey writes. “And why over the years didn’t Wynn Resorts require its board, including Mr. Okada, to sign Wynn’s existing code of conduct or take its standard antibribery-law training, just as other senior managers did? That requirement, says  a company spokesman, wasn’t made of the board until months after the troubles with Mr. Okada emerged in February 2011.”

At the same time, Okada’s lawsuit raises questions about the $135 million gift Wynn’s company gave to a foundation that supports the university, which has become a pet cause for top government officials in Macau and China. Essentially the suit hints at whether the gift - which represented 70% of the foundation’s overall endowment – was made to curry favor with officials as Wynn expands his casino operations in the booming gambling market of Macau.

Beyond that the two pieces offer some troubling insight into how casino moguls operate. The takeaway is that it is not a pretty business. That should serve as a further cautionary tale for lawmakers who get in bed with casino operators.

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